Category: Civil Rights

U.S. Supreme Court Stresses Importance of Commonality in Decertifying Massive Sex Discrimination Class of 1.5 Million Wal-Mart Employees

 Barnes & Thornburg LLP‘s Labor and Employment Law Department recently posted in the National Law Review an article about the U.S. Supreme Court’s reversing the largest employment class certification in history

In Wal-Mart, Inc. v. Dukes, reversing the largest employment class certification in history, the U.S. Supreme Court appears to have limited the circumstances in which federal courts can certify class actions – and not just in employment cases. The Court held that the lower federal courts had erred by certifying a class that included 1.5 million female employees from virtually every part of the country. The plaintiffs sought injunctive and declaratory relief, punitive damages, and backpay as a result of alleged discrimination by Wal-Mart against female employees in violation of Title VII of the Civil Rights Act of 1964. 

The Supreme Court held that class certification was improper because the class failed to meet the “commonality” requirement of Federal Rule 23(a)(3), which provides that a class can be certified “only if…there are questions of law or fact common to the class…” The Court noted that the mere allegation of “common questions” is insufficient under Rule 23. “Th[e] common contention… must be of such a nature that it is capable of classwide resolution – which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the [individual class members’] claims in one stroke.” 

The Court held that the Wal-Mart class did not meet the standard for commonality, because the evidence showed that Wal-Mart gave discretion to its supervisors in making employment decisions. The named plaintiffs “have not identified a common mode of exercising discretion that pervades the entire company… In a company of Wal-Mart’s size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction.” The Court concluded that, “Because [the named plaintiffs] provide no convincing proof of a company-wide discriminatory pay and promotion policy, we have concluded that they have not established the existence of any common question.”

The lack of commonality found in Wal-Mart can arise in class actions of many kinds. Under Wal-Mart, a question is “common” under Rule 23(a)(3) only if it can be decided on a class-wide basis. In the past, many named plaintiffs, and some lower courts, have overlooked this essential point. And, as in Wal-Mart, in many cases a claim of commonality will fail precisely because there is no way to rule on the question without addressing the individual facts relating to each purported class member. Wal-Mart makes clear that such a lack of commonality is sufficient to defeat class certification.

In addition to meeting all of the requirements of Rule 23(a), a class must comply with one of the three subparts in Rule 23(b). The trial court in Wal-Mart had certified the class under Rule 23(b)(2), which allows a class where the defendant’s alleged conduct “appl[ied] generally to the class, so that final injunctive or declaratory relief is appropriate respecting the class as a whole…”   Another issue before the Supreme Court was whether such certification was proper where the class sought recovery of substantial backpay based on Wal-Mart’s alleged discrimination.

The Court ruled that the purported class could not be certified under Rule 23(b)(2),  holding that “claims for individualized relief (like the backpay at issue here) do not satisfy the Rule.” The Court said that Rule 23(b)(2) “does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.”

Under the analysis in Wal-Mart , in the vast majority of class actions seeking a monetary recovery, the class can be certified (if at all) only under Rule 23(b)(3). Class certification under that provision is often more difficult, because a class plaintiff must prove that common questions “predominate” over individual questions and that a class action is “superior” to individual actions.  In addition, under Rule 23(c)(2)(A), individual notice must be given to all members of a Rule 23(b)(3) class at plaintiff’s expense, while such notice is optional, within the trial court’s discretion, if the class is certified under Rule 23(b)(2).

Wal-Mart is an important case in the area of employment law; but the Supreme Court’s holdings on the requirements of Rule 23 are likely to be helpful in defending class actions of all kinds

© 2011 BARNES & THORNBURG LLP

The Need for a Detailed Procedure of Judicial Review of Civil Rights Arbitration Awards after Rent-A-Center West, Inc. v. Jackson

Congrats to Nicole Farbes-Lyons of St. John’s University School of Law – winner of the National Law Review Spring Student Legal Writing Contest.  Nicole’s topic  explored several components underlying the Supreme Court’s recent Rent-A-Center decision and the subsequent need for clearer guidance per civil rights arbitration.  

Introduction

The November 17, 2010 New York Times article “Justices Are Long on Words but Short on Guidance” blasted the Supreme Court of the United States for its issuance of sweeping and politically polarized decisions, and criticized the quality of the Court’s “judicial craftsmanship” by positing that “[i]n decisions on questions great and small, the Court often provides only limited or ambiguous guidance to lower courts. And it increasingly does so at enormous length.” [1] The article continued that critics of the Court’s work “point to reasoning that fails to provide clear guidance to lower courts,” and described the Court’s recent rulings as “fuzzy” and “unwieldy.”[2]

In the past, the Supreme Court has been notably divided over issues such as abortion and the death penalty. But the “fuzziness” in many recent rulings is owed to an obvious ideological divide in the area of arbitration. Over the past decades, a significant number of controversial decisions have arisen from the considerable attention (and contention) the Supreme Court has given arbitration as it endeavors to counterbalance pro-arbitration rulings and assurances that arbitration does not erode sufficient, constitutionally proscribed judicial control.[3] However, these decisions have been largely criticized as providing, at best, a fuzzy blueprint for lower courts to design more specific rules.

Rent-A-Center v. Jackson [4] is the most controversial, ideologically split arbitration decision of the Supreme Court’s recent term. The central issue arose because Rent-A-Center requires employees to sign a two-part arbitration agreement as a condition of their employment, stipulating first that all disputes arising out of the employment relationship be settled by arbitration, and second, that an arbitrator must settle all challenges to the validity of the arbitration agreement.[5] When plaintiff Jackson, a Rent-A-Center account manager, brought a 42 USC § 1981(a) / 42 USC §§. 2000(e)(2) employment discrimination claim against the company, Rent-A-Center insisted that the claim be resolved through arbitration.[6]

Jackson argued that the arbitration agreement was unconscionable because it denied him meaningful and appropriate access to court for a satisfactory remedy in the exact way prohibited by federal statute. Rent-A-Center argued that this threshold question of whether there was a valid and fair agreement to arbitrate Jackson’s employment grievance was a matter for the arbitrator under the Federal Arbitration Act. Jackson asserted that because the unconscionability challenge went to both parts of the arbitration agreement, arbitrability of the agreement was a question for the court.

By a vote of five to four, the Supreme Court ruled in Rent-A-Center’s favor. Led by Justice Scalia, the Court held that if Jackson had solely questioned the second part of the contract – that the agreement must be arbitrated – then the challenge would have been proper before the court. But because the employee’s grounds for unconscionability applied equally to the agreement to arbitrate all employment disputes, the general question of unconscionability was no longer a “gateway issue” before the court, and was a matter for the arbitrator.[7]

Though it generated very little media attention, the majority decision in Rent-A-Center incited much sideline animosity. Critics of Rent-A-Center argued that the case is incorrectly decided and the latest, deadliest blow to consumers and employees in a trajectory of pro-arbitration rulings that are supplanting the constitutional right to court access with compulsory arbitration. Lawmakers have admonished the Court’s short-sightedness, and Senate Judiciary Committee Chairman Patrick Leahy referred to Rent-A-Center as “a blow to our nation’s civil rights laws”.[8] Throughout the blogosphere, commentators described Rent-A-Center as “audacious,” and, as Justice Stephens described in his dissent, “fantastic”.[9]

In addition to the political arguments arising from Rent-A-Center, critics also raised concerns about procedural challenges facing professional arbitrators in light of the Court’s holding. The recent case law culminating in Rent-A-Center has drawn criticism for its lack of guidance instructing either the courts or arbitrators about their respective roles within civil rights arbitration. Broad principles of arbitration and specific doctrines of the Supreme Court encourage but do not demand that the federal protections of civil rights statutes must be enforced in private arbitration. Though the Supreme Court gives assurance that courts may reject arbitral awards for “manifest disregard,” in regards to statutory protection, the courts do not agree as to whether a showing of manifest disregard is proper grounds for vacating an arbitration award.[10]

This conundrum is disturbing, and the doctrine culminating in Rent-A-Centercreates, at best, a blueprint for potential interpretations of arbitration agreements and judicial remedies for arbitrable disputes. The question left before the legal community is, then, whether the Supreme Court’s next step will be to clarify a specific process for civil rights arbitration. Until then, the courts will likely remain divided over the issue of whether, and under what circumstances, statute-created court access can be circumvented with compulsory arbitration agreements, without violating due process of law.

This paper will explore several components underlying the Rent-A-Centerdecision and the subsequent need for clearer guidance per civil rights arbitration. First, this paper will prepare the background and context of civil rights arbitration by exploring the legislative history and statutory framework of the Federal Arbitration Act (“FAA”) and the Civil Rights Acts, particularly focusing on 42 USC §1981(a) right to recovery under Title VII of the Civil Rights Act of 1964 (“Title VII”). Second, this paper will introduce problems of separability stemming from the Supreme Court’s efforts to increase the preemptive reach of the FAA under a broad definition of interstate commerce. Finally, this paper will assert potential remedies towards ameliorating the ambiguities that culminate in the Rent-A-Center decision, in light of this judicial and legislative history.

I. Background and Context of Civil Rights Arbitration

A. Statutory History of 42 USC § 1981

The civil right at issue in Rent-A-Center was Jackson’s right to protection against racial discrimination under 42 USC § 1981. During the Reconstruction Era, restrictive employment covenants were an acknowledged social evil used by former slave owners to deny freedmen any opportunity to exercise their rights to property and employment.[11] Recognizing the elements that impaired the emancipated slaves’ ability to obtain a fair trial in former Confederate states, Congress observed that, “To say that a man is a freeman and yet is not able to assert and maintain his right in a court of justice is a negation of terms.”[12]

The framers of the Civil Rights Acts had a specific legislative goal of rooting out discrimination. The Reconstruction Congress determined that the Civil Rights Acts would only have force if the statutes also created a clear mechanism of judicial enforcement, and delineated a remedy at law that would ensure all Americans the right to a fair tribunal.[13] Accordingly, this Congress created statutes providing a federal right to action as protecting against discrimination.[14]

The legislative history behind the Reconstruction Era Civil Rights Acts is not antiquated, and the Supreme Court has recognized that, “ameliorating the effects of past racial discrimination [is] a national policy objective of the highest priority.‟[15]A predominant effect of the Civil Rights Acts, particularly 42 USC § 1981(a), is that federal law prohibits discrimination in employment based on race, gender, disability, and sexual orientation. In 1991, the 102nd Congress expanded the provisions of 42 USC § 1981(a) and subsequent law to provide statutory basis for arbitration and alternative dispute resolution to “the extent available by law.”[16]

B. Statutory History of the Federal Arbitration Act

Formal arbitration practices can be dated to the Middle Ages, and many primary themes continue in modern arbitration: greater confidentiality, group amelioration, arbitrators with particularized commercial expertise, less formality than court proceedings, greater expedition, compromise, judgments that are final in merit, and the idea that, optimally, resolution of the dispute allows the parties to maintain favorable business relationships.

Despite this equitable premise, many difficulties hindered arbitration until the 20th century, such as difficulty in enforcing awards and judicial concern over jurisdictional ouster. In 1920, the New York State legislature enacted the first modern arbitration statute, which was followed in 1925 by enactment of the FAA and, subsequently, the advent of arbitrable statutes in most of the states.[17]Core principles of the New York statute were cloned in the FAA, particularly the idea that a pre-dispute agreement compelling arbitration is contractual, and therefore a litigant must assert a valid contract defense such as fraud, duress or unconscionability to prove the agreement is unenforceable.[18]Where a counter party to a pre-dispute agreement brings a case, a party can move to stay the court case by showing the agreement was arbitrable or, if there is general recalcitrance, move to compel arbitration.[19]

C. Common Criticisms of Modern Arbitration

These attributes of modern arbitration have been greatly criticized in the context of statutory arbitration, particularly in respect to Title VII claims.[20] In the legal discussions surrounding Rent-A-Center, Jackson’s supporters argued that he, and similarly situated employees, did not have a choice about whether to sign the Rent-A-Center mandatory pre-dispute arbitration agreement; Jackson had no opportunity to negotiate its terms, and the failure to sign would have precluded employment.[21] Additionally, supporters argued that Jackson should not have been expected to understand that his acceptance of the employment agreement was a waiver of his statutory right to court access.[22] Finally, supporters believed that, even in favorable arbitration circumstances, acceptance of all arbitration terms was likely to favor the employer with respect to fees, discovery, and procedures.[23] However, the Supreme Court has noted many times that these criticisms are not unique to civil rights arbitration but instead are inherent to the very nature of dispute resolution.[24]

The Court of Appeals has noted the issue of enforceability in employment contracts mandating employees’ waiver of court access with respect to all employment disputes relating to discrimination.[25] The court described an arbitrator who resolves statutory claims as a “private judge,” but noted that, unlike a judge, an arbitrator is not publicly accountable and the lack of public accountability may favor companies over individuals.[26] The court also acknowledged that confidentiality is won at the cost of binding precedent, which presents both a potential barrier to future plaintiffs’ ability to locate necessary information as well as reduced effectiveness of binding precedence.[27] The Court of Appeals also noted that the competence of an arbitrator to analyze and decide purely legal issues in connection with statutory claims might be questioned because arbitrators do not have to be legal professionals.[28] Nonetheless, the Court of Appeals dismissed all of these criticisms by stating that the Supreme Court has decided that, as a general rule, employment discrimination claims are fully subject to binding arbitration.[29]

The Supreme Court and Court of Appeals’ dismissal of these critical issues does little to assuage the valid concerns raised regarding civil rights’ arbitration.[30]Particularly in light of the legislative history substantiating 42 USC § 1981, the Court of Appeals’ deference, without meaningful underlying analysis behind its decision, is demonstrative of the enormous lack of guidance criticized by the New York Times.

II. The Preemptive Reach of the Federal Arbitration Act

A. Basic Principles of Federal Preemption in Arbitration

The FAA is something of an anomaly in the field of federal-court jurisdiction.[31]The FAA does not vest exclusive subject matter jurisdiction in the federal courts though it creates the body of federal substantive law establishing and regulating arbitration.[32] Unless there is either a federal question or complete diversity, it is up to the state courts to apply the FAA and the federal case law standards for its implementation in any cases involving interstate commerce.[33]

Some, including some Supreme Court Justices, take this to mean that the congressional intent was that the FAA should only apply in federal court as a federal remedy.[34] The disagreement between jurists of the correct application of the FAA is, at least, indicative of the lack of clarity in the congressional intention behind the Act. The FAA says that it applies to all matters involving “interstate commerce.”[35] However, interstate commerce of 1925 was a restricted concept, to the point that a business’ involvement in interstate activity did not create sufficient minimum contact to assert jurisdiction over it.[36] Therefore, it is questionable whether this statutory language should be imposed upon by a modern definition of interstate commerce.

B. Federal Preemption of the FAA and Substantive Law Under Erie

Additionally, the Supreme Court did not distinguish substantive diversity of state versus federal law until Erie v. Tompkins in 1938.[37] Under Erie, state contract law is applied to interpret the substantive meaning of the arbitration agreement.[38] Within the context of preemption – under which interstate commerce is broadly sweeping, without regard to its substantial impact – the Court has construed the FAA as broadly as the constitutional limit.[39] Under the constitutional provisions of the Supremacy Clause, the Supreme Court has held that state courts and legislatures cannot enact statutes restricting arbitration.[40]Likewise, states cannot ease the federal presumption of arbitrability.[41]

C. Restrictions to Separability

This imposition of preemption may be the most problematic because of its restrictions to common law contract defenses. In his dissent to Prima Paint Corp. v. Flood & Conklin Mfg. Co., Justice Black described the Court’s holding that the preemptive reach of the FAA compels a counter party to carry out his agreement to arbitrate even though the a court might find the agreement void because of fraud as “fantastic.”[42] Justice Black continued in his dissent that he was unconvinced that a broad preemptive application of the FAA is not a denial of a person’s rights to due process of law.[43]

Under contract law,undue influence, fraud, and unconscionability are remedies available to parties attempting to rescind a contractual clauses. Contract defenses may be ruled on separately or prior to arbitration. This makes sense because, as Justice Stevens suggested, there is no need to arbitrate an unenforceable agreement.[44] In Rent-A-Center, plaintiff Jackson presented a well-pleaded case of unconscionability, relying on the separability of contract and arbitration.[45]However, the Supreme Court’s decision in Rent-A-Center, that a defense of unconscionability should be heard by the arbitrator, entirely undermines the presumed separability of the arbitrable matter and the arbitration agreement.[46]

This ruling is unwieldy, at best. It does not make sense to compel arbitration of the validity of an arbitration agreement when a party claims to have contractual defenses to that arbitration agreement.[47] Nevertheless, the Rent-A-Centerdecision approves this conceptual change to separability. In light of the legislative intent of the FAA and Title VII, any denial of court access resulting from this faulty logic must be considered a lack of due process.[48]

III. Judicial Review of Arbitration Awards Post-Rent-A-Center

A. Lack of Guidance on Judicial Review of Civil Rights Arbitration

Jackson’s argument in Rent-A-Center was that the making of the arbitration agreement was unconscionable, and therefore required the court to make a determination of the agreement’s legality before compelling any arbitrable review of the dispute.[49] However, as illustrated in the previous sections, even those legal minds most versed in the FAA are unable to agree whether compulsory arbitration of employment discrimination suits can be forced on employees. The Court’s ruling in Rent-A-Center dramatically affects the ability of employees to challenge the enforceability of arbitration agreements, because it sends valid challenges to arbitration to the arbitrator.[50]

However, the Rent-A-Center decision provides little guidance on judicial review of contractual defenses to arbitration. The decision does not consider the obvious question that arises from its holding: in light of this decision, has the scope of review of arbitration awards changed such that the arbitrator’s determination of whether to arbitrate is a valid ground for judicial review?

The Rent-A-Center decision is premised on the assumption that an arbitrator’s ruling on unconscionability is still subject to post-award review under the FAA.[51]In fact, Justice Scalia was insistent that an arbitrator would not be able to disregard the law when determining whether an arbitration agreement is unconscionable.[52] However, the Rent-A-Center decision does not provide any guidance on the procedure of this scope of review.

B. The Doctrine of Manifest Disregard

Justice Scalia’s insistence that an arbitrator may not disregard the law hints at the doctrine of manifest disregard, and the validity of its application to the scope of review. The Supreme Court has ruled that, so long as the litigant may vindicate his or her statutory claim in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.[53] However, actual judicial review of arbitration awards is strictly limited under section 10 of the FAA.[54] The award may be vacated only if the proceeding was tainted with corruption, misconduct or bias; if the arbitrator exceeded his or her authority; or if the arbitrator acted in “manifest disregard of the law.”[55]

Generally, manifest disregard means that the arbitrator knew the applicable law but purposefully chose to ignore it or refused to apply it.[56] Since the inception of the doctrine, there has been a great expansion of the arbitrator’s authority over disputes.[57] This expansion of power has been so broad that, under applicable arbitration rules, the arbitrator himself may not correct his award after release for substantive deficiencies.[58] Because judicial review of arbitration awards is rare, it seems a convincing argument that manifest disregard applies in circumstances where arbitrators have exceeded their powers.[59] However, the doctrine is also contested because the language of section 10 does not specifically refer to manifest disregard as an independent ground for vacating arbitration awards.[60]

A good deal of confusion around the extent of the arbitrator’s power and the applicability of manifest disregard is owed to the lack of guidance provided by recent Supreme Court decisions. Prior to Rent-A-Center, the Supreme Court held in Hall Street Assocs., LLC v. Mattel, Inc. that the statutory grounds for judicial review under section 10 are exclusive. This ruling indicated that manifest disregard was not valid grounds for review.[61] Shortly after the Hall Streetdecision, the court concluded, in dictum, that if an arbitration panel exceeds its powers, the courts are authorized by section 10(b) of the FAA to either direct a rehearing or review the question de novo.[62] The federal circuit courts have been diametrically opposed in their rulings, as they struggle to interpret the meaning of these conflicting Supreme Court writings.[63]

C. Post-Award Judicial Review after Rent-A-Center

Historically, courts have been reluctant to even review arbitration awards, let alone vacate or demand rehearing. However, Rent-A-Center may be an opportunity for a new post-award standard of review.

Consider the following: An arbitration panel is selected to hear an employment discrimination dispute. Though the panel members are all industry experts and well versed in employment discrimination issues, they are not lawyers. The employee asserts that not only have her Title VII rights been violated, but also that the arbitration agreement is invalid because it was fraudulently induced. In its misunderstanding of applicable contract law, the panel misinterprets the employee’s claim and decides that the arbitration agreement is enforceable. The panel proceeds with arbitration.

This example illustrates a potential conflict arising from the Supreme Court’sRent-A-Center and Hall Street decisions. Does the arbitrators’ incorrect determination manifest purposeful disregard of the law? Although section 10 of the FAA does not allow a court to set aside an award for an error of law per se, an argument could be made that, in such a case as the previous scenario, the arbitrator exceeded his or her powers under section 10(a)(4) by acting on an unfamiliar area of law. However, there is no precedent on how the court should proceed to review such a situation. As the Supreme Court continues to expand the scope of post-award judicial review, more guidance and clearer judicial intent will be required to direct both arbitrators and the courts.

Professional mediator and former Columbia University Negotiation and Conflict Resolution faculty member, Bathabile Mthombeni, vehemently agrees that the Supreme Court must put forth specific rules relating to civil rights arbitration claims. Professor Mthombeni is an enthusiastic supporter of mediation, including employment and statutory mediation. However, her wariness of compulsory arbitration has increased over the years in tandem with Supreme Court pro-arbitration rulings.

“I am very concerned about the way that Rent-A-Center was decided because of the impact this has on access to the courts – especially by people who are likely the most vulnerable,” Professor Mthombeni stated. “Do potential employees really have a choice? [In the future, will] this mean that an employee cannot file with the EEOC? And, as the dissent inRent-A-Center points out, how are the lawyers arguing these cases supposed to anticipate how thinly they must slice their arguments as to the seperability of various portions of the agreement to arbitrate?”

Professor Mthombeni’s concern about the Rent-A-Center case’s impact on employees and consumers is based in her extensive knowledge of both dispute resolution and civil rights statutes. She suggests that arbitrators should be held to the same standards of evidential and procedural rules that would pertain in court. “The framers of [42 U.S.C. § 1981(a)] did not anticipate those claims being investigated or decided in arbitration. My recollection of 1981 legislation is that it is especially articulated in order to allow individuals to act as attorneys general, recognizing the particular interest that society has in rooting out civil rights violations.

“It does not seem that arbitration is a forum that champions this end. I am at least concerned about the lack of protections afforded to litigants in arbitration – in particular… the rules of evidence and civil procedure not being strictly adhered to.”

Professor Mthombeni suggests that not only should post-judicial review standards be more defined but also that the Supreme Court should parallel its rulings with evidential and procedural rules of arbitration. “Some might argue that the rules of evidence and civil procedure are themselves flawed. But at least they are part of a commonly understood scheme that has evolved and been tested over several hundred years that puts everyone on level ground – so long as they all understand the rules.”

Conclusion

In their best light, the Supreme Court’s pro-arbitration rulings can be dense and confusing. The Court has upheld the validity of mandatory compulsory arbitration agreements that waive an employee’s right to court access as predicated by Title VII. The Court has held that this negation of the legislative intent of Title VII is still fair, so long as arbitration provides the same statutory remedy as the court system. The Supreme Court has previously held that, because arbitration agreements are separable contractually, a party may seek judicial review of defenses to the arbitration agreement.

However, the Supreme Court has now ruled in Rent-A-Center that the entire arbitration agreement, even the contractual defenses, may be removed to the arbitrator, for a determination of whether the agreement to arbitrate is valid. This ruling is not only a confusing departure, but also requires the Supreme Court to go further with an explanation of the scope of review for civil rights arbitration.

The Rent-A-Center opinion holds that judicial review of challenges to civil rights arbitration agreements is still available under the FAA, but does not address how this review should happen. Without guidance and procedure for post-award review, and without guidance of whether manifest disregard is applicable under the FAA, the criticism of the Supreme Court’s pro-arbitration rulings as “sweeping”, “politically polarized,” and “fuzzy” will likely continue.

[1]Liptak, Adam. “Justices Are Long on Words but Short on Guidance.” The New York Times Online. 17 November 2010, available athttp://www.nytimes.com/2010/11/18/us/18rulings.html?pagewanted=1&_r=1.

[2]Id.

[3]See Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 200-01 (2d. Cir. 1998).

[4]Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 2772 (2010).

[5]Id.

[6]Id.

[7]See id.

[8]Marks, Clifford M. “Supreme Court’s Arbitration Ruling Draws Liberal’s Ire.” The Wall Street Journal Blogs. 21 June 2010, available athttp://blogs.wsj.com/law/2010/06/21/supreme-courts-arbitration-ruling-draws-liberals-ire/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+wsj/law/feed+%28WSJ.com:+Law+Blog%29.

[9]Lithwick, Dahlia. “Justice by the Hour.” Slate.com. 26 April 2010. Accessed 10 November 2010. http://www.slate.com/id/2252001/pagenum/all/#p2.

[10]See Coffee Beanery, Ltd. v. WW, L.L.C., 300 F.3d 415 (6th. Cir. 2008) (holding that manifest disregard is an applicable standard of review). But see Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349(5th Cir. 2009) (holding that manifest disregard is not an applicable standard of review.)

[11]A common antebellum holding, reflecting Justice Taney’s decision in Dred Scott,was that freedmen did not have the right to exercise the same civil rights as white men. See e.g., Howard v. Howard, 51 N.C. 235 (1858).

[12]Cong. Globe, 39th Cong., 1st Sess. 41 (1866).  See generally Report of the Joint Committee on Reconstruction Pt. II, 240 (1866).

[13]See, e.g., Cong. Globe, 39th Cong., 1st Sess.1758 (1866) (statement of Sen. Trumbull).

[14]42 U.S.C. § 1981(a).

[15]Franks v. Bowman Transp. Co., 424 U.S. 747, 779 (1976).

[16]Pub. L. 102-166, Title I §118.  There has been consistent disagreement between the circuit courts whether this statutory language refers to the extent defined by Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (holding that an agreement to arbitrate employment claims could be binding even under the ADEA), versus Alexander v. Gardner-Denver Co., 415 U.S. 36 (holding that an employee’s suit under Title VII of the Civil Rights Act of 1964 is not foreclosed by the prior submission of his claim to arbitration).

[17]N.Y. C.P.L.R. § 7501.

[18]9 U.S.C. § 1-16.

[19]9 U.S.C. § 4.

[20]Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 203 (2d. Cir. 1998).

[21]Brief of Amicus Curiae Service Employees International Union, Legal Aid Society, Employment Law Center, National Employment Lawyers Association, National Employment Law Project, Women’s Employment Rights Clinic, and The Employee Rights Advocacy Institute for Law & Policy in Support of Respondent. Part I, p. 6.

[22]Id.

[23]Id.

[24]Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 481 (1989).

[25]Cole v. Burns Int’l Sec. Servs., 105 F.3d 1465, 1476 (D.C. Cir. 1997).

[26]Id. at 1477.

[27]Id.

[28]Id.

[29]Id. at 1478, see also Gilmer, 500 U.S. 26, 34-35.

[30]Id.

[31]Moses H. Cone Mem’l Hospital v. Mercury Constr. Corp., 460 U.S. 1, 26.

[32]Id.

[33]Id.

[34]Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (J. Stevens dissenting).

[35]The Citizens Bank v. Alafabco, Inc., 539 US 52, 53 (2003).

[36]Gilmer,500 U.S. at 39-40 (J. Stevens dissenting).

[37]See Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938)

[38]Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 271 (1995). “The Act’s provisions (about contract remedies) are important and often outcome determinative, and thus amount to “substantive”, not “procedural” provisions of law.”

[39]Id.

[40]Id.

[41]Prima Paint Corp. v. Flood & Conklin Mfg. Co.,388 U.S. 395, 400.

[42]Id.at 407 (J. Black dissenting).

[43]Id.

[44]Id.

[45]Id. As a matter of substantive federal law, a claim of fraud in the inducement of a contract containing an arbitration clause is for the arbitrator, but the issue of fraud in the inducement for the arbitration clause itself is a question for the court.Id.

[46]Id.

[47]130 S. Ct. at 2782 (J. Stevens dissenting).

[48]Gilmer,500 U.S. at 39-40 (J. Stevens dissenting).

[49]Brief of Amicus Curiae The American Federation of Labor and Congress of Industrial Organizations in Support of Respondent. Part I, p. 5-9.

[50]130 S. Ct. at 2782 (J. Stevens dissenting).

[51]9 U.S.C. § 10.

[52]130 S. Ct. at 2781.

[53]Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985).

[54]Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 202 (2d. Cir. 1998).

[55]Merrill Lynch v. Jaros, 70 F.3d 418, 421 (6th. Cir. 1995).

[56]Halligan, 148 F.3d at 202.

[57]The concept of manifest disregard was first used by the Supreme Court inWilko v. Swan, 346 U.S. 427 (1953).

[58]A.A.A., Rule R-46.

[59]Stolt-Nielsen S.A. v. AnimalFeeds Int’l. Corp., 548 F.3d 85, 95 (2d. Cir.

2008), rev’d on other grounds, 130 S. Ct. 1758 (2010).

[60]9 U.S.C. § 10.

[61]Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 579, 589 (2008). “[T]he statutory text gives us no business to expand the statutory grounds [of judicial review under the FAA].” Id.

[62]Stolt-Nielsen, S.A.,130 S. Ct. at 1772.

[63]Supra note 10.

Copyright © 2011 Nicole Farbes-Lyons

Comprehensive Summary of the Final Regulations to the ADA Amendments Act

This week’s guest blogger at the National Law Review is Jeffrey S. Nowak of  Franczek Radelet P.C..  Jeffrey provides a very comprehensive overview of the final regulations implementing the ADA Amendments Act of 2008 (ADAAA):   

On March 25, 2011, the U.S. Equal Employment Opportunity Commission (EEOC) published final regulations implementing the ADA Amendments Act of 2008 (ADAAA), a statute that now greatly expands the number of employees and applicants who will be considered “disabled.”  The final regulations fundamentally change the manner in which an employer must treat and manage employees with medical conditions in the workplace, since it now will be much easier for individuals to establish that they are disabled.  This Comprehensive Summary provides an overview of some of the key provisions in the final ADAAA regulations to help employers better understand the key changes in the law and adopt strategies to minimize liability.

Background

As originally enacted, the Americans with Disabilities Act (ADA) defines an individual with a disability as a person who has a physical or mental impairment that “substantially limits” one or more “major life activities.”  Individuals may also be covered under the ADA if they have a “record of” a disability or are “regarded as” disabled.  Since the ADA took effect, the Supreme Court and lower federal courts have construed the definition of disability in a relatively narrow fashion.  On September 25, 2008, President Bush signed the ADAAA into law.  Although the ADAAA retains the same definition of “disability” under the original Act, it makes sweeping changes to the manner in which these terms are to be construed.

In short, the ADAAA and its final regulations now shift the focus of virtually every situation that implicates the ADA.  Before the amendments, the interpretation of the ADA largely focused on whether an individual was substantially limited in a major life activity and, therefore, disabled under the ADA.  Under the ADAAA’s broader construction, the focus is not directed toward the actual definition of disability, but rather on discrimination and reasonable accommodation.  Given the ADA’s new statutory framework and new regulations that stretch the statute even further, employers should be prepared now more than ever before to respond to accommodation requests, make accommodations where necessary, and take precautions to avoid discriminatory decisions involving employees and applicants with medical conditions.

A copy of the final regulations can be found here.  The EEOC also has issued a guidance sheet and a fact sheet to aid employers in understanding the final regulations.

The final regulations address key issues, which are covered in this executive summary.

  • Will certain impairments always be considered “disabilities”?
  • What constitutes a “major life activity?”
  • What does it mean to be “substantially limited” in a major life activity?
  • To what extent are temporary or episodic impairments considered disabilities?
  • How do “mitigating measures” affect the analysis of whether an individual is disabled?
  • What does it mean for an employee to be “regarded as” disabled?

Broad Construction of the Definition of “Disability”

Taking its lead from the ADAAA, the final regulations provide that the definition of “disability” should be “broadly” construed “to the maximum extent permitted by the terms of the ADA.”  (The message from Congress and the EEOC to employers could not be any clearer: Stop focusing on whether an individual is disabled and focus instead on reasonable accommodation.)  Although the final regulations track the definition of “disability,” a term which remained intact, the regulations clarify that there is a shift in focus to whether employers have complied with their obligations and whether discrimination occurred, as opposed to whether an individual meets the definition of a “disability.”

Certain impairments “virtually always” covered

Further illustrating the point, in spite of the ADAAA’s (and the final regulations’) rejection of the notion of a “per se” disability, the final regulations take the extraordinary step of listing certain impairments that “will, as a factual matter, virtually always be found to impose a substantial limitation on a major life activity.”  The EEOC suggests that these assessments should be “particularly simple and straightforward” (tellingly, the title of the subsection is “Predictable Assessments”).  These impairments include:

  • Deafness
  • Blindness
  • Intellectual disability (formerly known as mental retardation)
  • Partially or completely missing limbs
  • Mobility impairments requiring the use of a wheelchair
  • Autism
  • Cancer
  • Cerebral palsy
  • Diabetes
  • Epilepsy
  • HIV or AIDS
  • Multiple sclerosis
  • Muscular dystrophy
  • Major depression
  • Bipolar disorder
  • Post-traumatic stress disorder
  • Obsessive compulsive disorder
  • Schizophrenia

This list includes many conditions that often were not substantially limiting impairments under the pre-ADAAA.  Nevertheless, the list tends to undermine the EEOC’s long-held position that an “individualized assessment” should be conducted to determine whether an impairment is indeed a disability.

Notably, the final regulations removed a section from the proposed regulations that listed certain impairments that “may be disabling for some individuals but not for others,” such as asthma, back/leg impairment, carpal tunnel syndrome, high blood pressure, psychiatric impairment (less severe than major depression) and learning disability.  In light of the expansive sweep of the final regulations, however, plaintiffs with impairments like these, as well as others, likely will not face a difficult task in convincing a court that they are disabled.

Less Demanding Standard for “Substantially Limits”?

To be disabled, one must have an impairment that “substantially limits” a major life activity.  Under the pre-ADAAA, employers often questioned the extent to which an impairment must “substantially limit” before an individual is considered disabled.  Unfortunately for employers, the EEOC declined to quantify the term “substantially limits” in the final ADAAA regulations, explaining that “a new definition would…lead to greater focus and intensity of attention on the threshold issue of coverage than intended by Congress.”  As such, the final regulations offer employers little concrete guidance in identifying the threshold at which an impairment qualifies as “substantially limiting,” aside from the presumption that it must be a lower threshold than previously adopted by the U.S. Supreme Court in its decisions leading up to passage of the ADAAA.

Instead, the regulations provide “nine rules of construction” to be applied in determining whether an impairment “substantially limits” a major life activity.  Most of the rules come directly from the language of the ADAAA, but several have been added by the EEOC:

  1. “The term ‘substantially limits’ shall be construed broadly in favor of expansive coverage, to the maximum extent permitted by the terms of the ADA.  ‘Substantially limits’ is not meant to be a demanding standard.”
  2. The determination of whether an impairment is “substantially limiting” should be made by comparing the ability of an individual to the general population.  The impairment does not need to “prevent, or significantly or severely restrict” the performance of a major life activity in order to be substantially limiting.
  3. In all ADA cases, the focus should be on whether the employer has complied with its statutory obligations, since the “threshold issue” of substantially limits should not require extensive analysis.
  4. “The determination requires an ‘individualized assessment,’ but the assessment should be done by requiring “a degree of functional limitation that is lower than the standard for ‘substantially limits’ applied prior to the ADAAA.”
  5. Comparing an individual’s performance of a major life activity to the general population should not generally require scientific, medical or statistical analysis.
  6. The determination should be made without regard to the “ameliorative effects of mitigating measures” other than ordinary contact lenses and eyeglasses.
  7. “An impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.”
  8. An impairment need not limit more than one major life activity.
  9. The effects of an impairment lasting or expecting to last fewer than six months can be “substantially limiting.”

The Effect of Condition, Manner and Duration

Commenting further on the “substantially limits” prong, the final regulations explain that, to determine whether an individual is “substantially limited” in a major life activity, it may be useful to consider the condition under or the manner in which an individual performs a major life activity; the duration of time it takes the individual to the activity as compared to most people in the general population; and the difficulty, effort, pain or amount of time required to perform the activity.

For example, under the new regulations, it does not matter whether an individual with a learning disability can read and write like the majority of people in the general population.  The regulations focus instead on how difficult it was for the individual to reach the level of literacy, (i.e., how long it took and the conditions which the individual had to overcome).  As a result, an individual may be substantially limited in a major life activity even if he or she can perform the activity at the same level as the general population, if it took more time, effort or work to become proficient compared to most people in the general population.

The Interpretation of “Major Life Activities” is Expanded Further

To be disabled under the law, one must have a physical or mental impairment that “substantially limits” one or more “major life activities”.  When determining whether an individual is substantially limited in a major life activity, according to the final regulations and EEOC’s interpretive guidance provide, the process should “not demand extensive analysis” and “usually will not require scientific, medical or statistical analysis.”

Notably, the final regulations expand an already “non-exhaustive” list of what may be deemed major life activities to include eating, sleeping, standing, lifting, bending, reading, concentrating, thinking and communicating.  The final regulations also include additional examples of major life activities, such as sitting, reaching and interacting with others.  When determining other examples of major life activities, the final regulations expressly reject the pre-ADAAA interpretation that the activity must be of “central importance to daily life,” a rule which expressly rejects the Supreme Court’s ruling in Toyota Motor Manufacturing v. Williams.  In effect, an activity no longer is required to be of “central importance.”

In a significant departure from the past, the ADAAA and final regulations expand the definition of “major life activities” to include the “operation of major bodily functions,” such as the immune system and normal cell growth, and neurological, bowel, bladder, circulatory and reproductive functions.  The final regulations list several additional functions, such as cardiovascular, lymphatic and musculoskeletal, and specify that the operation of a major bodily function includes the operation of an individual organ within the body (such as the liver or heart).  The appendix to the final regulations provides several examples of impairments that affect major bodily functions, e.g., cancer affects normal cell growth; diabetes affects functions of the pancreas and endocrine system; and rheumatoid arthritis affects musculoskeletal functions.

Work as a “major life activity”

The regulations also breathe new life into the “major life activity” of working.  Under the pre- ADAAA, a plaintiff’s claim that he or she was substantially limited in the major life activity of work almost always was dismissed by the court, largely because the employee was unable to show that the impairment substantially limited the employee’s ability to perform a “broad range” of jobs.  The final regulations maintain this requirement but lower the employee’s burden, claiming that this previous standard was “overly strict.”  Under the new regulations, if an individual’s job requires heavy lifting but the employee cannot lift heavy items and cannot perform the job or other jobs that require heavy lifting, then the employee is substantially limited in performing the class of jobs that require heavy lifting.  Is this shift in the rule all for naught?  As the final regulations point out, an impairment that substantially limits working will in most situations also substantially limit another major life activity.

Other Significant Regulatory Changes

Nearly All “Mitigating Measures” Are No Longer Considered

Under prior Supreme Court and federal appellate court precedent, employers were allowed to consider “mitigating measures” in determining whether an individual’s impairment substantially limits a major life activity under the ADA.  For example, if an individual used a hearing aid or cochlear implant due to a hearing impairment, it typically was not considered a disability because the individual was not substantially limited in the major life activity of hearing.  Because of the mitigating measure (i.e., the hearing aid), they could hear perfectly well.  Under the new regulations, however, employers are no longer allowed to consider such measures.  As a result, employers will be required to analyze each individual’s impairment in its unmitigated state.  Thus, the individual with a hearing aid would likely be substantially limited in hearing because we are obligated now to consider them without the use of a hearing aid.

The final regulations do provide one important exception: employers are permitted to consider the ameliorative effects of using ordinary eyeglasses or contact lenses.  The term “ordinary eyeglasses or contact lenses” is defined as lenses that are intended to fully correct visual acuity or to eliminate refractive error.  For example, an individual with severe myopia whose visual acuity is fully corrected is not substantially limited in seeing because the ameliorative effect of the lenses must be considered.  Similarly, eyeglasses or contact lenses that are the wrong or outdated prescription may nevertheless be “ordinary” if there is evidence that a proper prescription would fully correct visual acuity or eliminate refractive error.

What is also important to note is that both the ameliorative and non-ameliorative effects of mitigating measures, as well as the individual’s use or non-use of such measures (e.g., taking or refusing to take medication, even though prescribed by a physician) can be considered when determining whether the employee is a “qualified” individual with a disability or whether the employee poses a direct threat to safety; however, it will not affect whether the individual meets the definition of being disabled.

Temporary and Episodic Impairments May Constitute disabilities

Under the final regulations, short-term impairments and chronic impairments with short-term symptoms may be considered disabilities.  In the past, many courts declined to extend ADA coverage to individuals whose impairments were substantially limiting for only a short or limited period of time.  The new regulations reject this reasoning and prescribe that the duration of an impairment or symptom should not be dispositive in determining whether an individual is disabled.

Temporary and Short-Term Impairments

Clearly, one of the most significant changes to the final regulations is the EEOC’s decision to reject the long-held view that temporary impairments are not substantially limiting.  The EEOC previously took the position that the duration or expected duration of an impairment should be considered in determining whether the impairment is disabling.  That no longer appears to be the case.  The final regulations ambiguously state that “an impairment lasting or expected to last fewer than six months can be substantially limiting.” (Emphasis added).  When this language was first proposed, many commenters expressed that the new language would create confusion as to how long an employer’s impairment must last or be expected to last in order to impose ADA obligations on the employer.  (Further complicating matters, the regulations state that an employee who is regarded as having a “transitory and minor” impairment that is expected to heal shortly is not considered disabled.  Thus, it is conceivable that individual with a temporary impairment, such as a broken hand, may be disabled because the impairment substantially limits a major life activity, but may not be “regarded as” disabled for purposes of the Act.)

In response to these concerns, the EEOC opined that specifying a durational minimum for a disability would impose a more stringent standard than what Congress required.  In fact, the final regulations go even further than the proposed regulations on this point.  In the proposed rules, the EEOC identified a category of temporary non-chronic impairments that usually would not be considered a disability—for example, the common cold, seasonal influenza, a sprained joint, minor and non-chronic gastrointestinal disorders, a broken bone expected to heal completely, appendicitis and seasonal allergies.  The EEOC deleted this category in the final regulations, explaining that the provision caused confusion and was too limiting.

The EEOC’s position on the issue of temporary impairments is debatable.  It is not clear that Congress intended to extend ADA coverage to short-lived impairments.  Moreover, it is still likely that certain impairments of short duration which are expected to heal quickly, such as a common cold or a sprained ankle, will not be considered disabilities.  However, the regulations make clear that employers must consider all impairments, even short term ones, on a case-by-case basis.

Episodic Impairments

Under the ADAAA and the final regulations, an episodic impairment or impairment in remission is a disability if the impairment would substantially limit a major life activity when active.  This means that an individual with a serious chronic condition such as epilepsy or cancer could be considered disabled under the Act even if that person rarely or never experiences symptoms that would impact their employment.  The regulations provide specific examples of impairments that may be episodic in nature, including epilepsy, cancer, multiple sclerosis, hypertension, diabetes, asthma, major depressive disorder, bipolar disorder and schizophrenia.

The Act’s express inclusion of episodic impairments presents some practical challenges for employers.  Many episodic impairments are unpredictable in their effects on the individual.  For example, an employee diagnosed with asthma may not experience an attack for several months.  However, the fact that an asthma attack could limit a major life activity may require the employer to provide a reasonable accommodation.  The same is true for progressive impairments, such as Parkinson’s or Alzheimer’s Disease.  Many Parkinson’s and Alzheimer’s patients do not experience any symptoms in the early stages of the disease.  Nevertheless, the fact that an individual could at some point in the future experience symptoms that would substantially limit a major life activity likely would render the person disabled even before the condition worsens and (practically speaking) substantially limits a major life activity.

“Regarded As” Individuals Need Only Prove Perception of an “Impairment”

Under the original ADA as interpreted by the courts, an individual was “regarded as” disabled only when the employer perceived the individual to have an impairment that “substantially limited” him or her in a major life activity.  Under the final regulations, the same individual seeking to bring a “regarded as” claim need not prove that the employer believed the individual to have an impairment that substantially limits a major life activity, but merely that the employer perceived the employee as having an “impairment,” and based an employment decision on that perception.

Under the ADAAA, an individual subjected to a prohibited action (e.g., failure to hire, denial of promotion, termination or harassment) because of an actual or perceived impairment will meet the “regarded as” definition of disability whether or not the impairment “substantially limits” a major life activity unless the impairment is both transitory and minor.  The ADAAA further clarifies that a person who is “regarded as” disabled is not entitled to a reasonable accommodation unless the person also fits within one of the other two prongs of the definition of “disability.”

Notably, the final regulations specify that the “regarded as” prong should be the primary means of establishing coverage in ADA cases that do not involve reasonable accommodation, and that consideration of coverage under the first and second prongs will generally not be necessary except in situations where an individual needs a reasonable accommodation.

The final regulations further clarify that establishing that an individual is “regarded as having such an impairment” does not, by itself, establish liability.  Thus, even where an individual proves that an employer made a decision on the basis of an actual or perceived impairment, the employee must still show that he was “qualified” for the position in question in order to establish an ADA violation (i.e., he can perform the essential job functions of the position with or without a reasonable accommodation).   The employer may also utilize any otherwise available statutory defenses.  For example, an employer may still defend a decision to refuse to hire an applicant on the grounds that the individual would pose a “direct threat” to health and safety due to the nature of his impairment.

The proposed regulations originally identified several concrete examples of “transitory and minor” impairments that would not be sufficient to meet the “regarded as” prong of the statute, such as a broken bone that is expected to heal normally or a sprained wrist that was expected to heal in three weeks.  Unfortunately, these concrete examples were omitted from in the final regulations, leaving employers without clear guidance as to what constitutes a “transitory and minor” impairment.  Instead the appendix to the final regulations stress only that the inquiry as to whether an impairment is “transitory and minor” is an objective standard and provides these examples:

For example, an employer who terminates an employee whom it believes has bipolar disorder cannot take advantage of this exception by asserting that it believed the employee’s impairment was transitory and minor, since bipolar disorder is not objectively transitory and minor.  At the same time, an employer that terminated an employee with an objectively ‘‘transitory and minor’’ hand wound, mistakenly believing it to be symptomatic of HIV infection, will nevertheless have ‘‘regarded’’ the employee as an individual with a disability, since the covered entity took a prohibited employment action based on a perceived impairment (HIV infection) that is not ‘‘transitory and minor.’’

Notably, the final regulations give no example of an impairment that EEOC would find to be “transitory and minor” under this standard.

What about an employee’s symptoms?

In a nod to employers, the final regulations do not include a provision contained in the proposed regulations providing that actions taken because of an impairment’s symptoms (or because of the use of mitigating measures) constitute actions taken because of an impairment under the “regarded as” prong.  Employer commentary pointed out that this proposed standard could create liability for an employer when, for example, disciplining an employee for violating a workplace rule, even where the violation resulted from a symptom of an underlying impairment of which the employer was unaware.  This would have resulted in a clear departure from the EEOC’s existing policy guidance and court decisions, which recognize, among other things, that an employer may discipline an employee for job related misconduct resulting from a disability if the rule or expectation at issue is job related and consistent with business necessity.  EEOC Enforcement Guidance on the Americans with Disabilities Act and Psychiatric Disabilities, EEOC Notice No.  915.002 Mar. 25, 1997 http://www.eeoc.gov/policy/docs/psych.html.  The preamble to the Final Regulations states that this prior Guidance remains in effect, at least for now.

How Do Employers Respond to the New Regulations?

One might ask whether any employee is considered disabled under these new regulations.  Clearly, the ADAAA and its final regulations change how employers respond to and manage employees with medical conditions and who request accommodations in the workplace.  At a minimum, we suggest employers take the following approach to the “new” ADA.

  • The range of impairments that may substantially limit a major life activity has widened considerably.  Although not every impairment will constitute a disability, the analysis of whether an impairment “substantially limits” a major life activity will not be the focus of a court’s inquiry.  In light of this change in emphasis, employers should not focus on whether an employee is actually “disabled;” rather, they should focus on insuring that they are in compliance with the statute.  Therefore, as an initial matter, employers should review and revise workplace reasonable accommodation policies to ensure employees are aware of the policies and to make clear the lines of communication as to accommodations in the workplace.  Similarly, employers should maintain processes for identifying, evaluating, documenting and providing reasonable accommodations as required.
  • Employers should be proactive about engaging in an interactive process with employees who have an impairment.  In doing so, they should identify which among their personnel will be responsible for addressing issues of accommodation, and actually engage in an interactive process when an individual makes a request for assistance in the workplace.  An employer’s best tactic in defending an ADA lawsuit is to demonstrate that it made good faith efforts to accommodate an employee, rather than questioning or challenging the employee’s medical condition.  Thus, the interactive process above must become the norm.
  • Review all job descriptions to ensure they specifically and accurately describe the essential functions of the job.  Notably, under the new definition of a “regarded as” disability, any decision that relies in whole or in part on any perceived or actual physical impairment will be subject to scrutiny under the ADAAA.  It is now more important than ever to insure that any physical or mental job requirements are truly necessary.Employers should insure that all anti-harassment policies explicitly prohibit harassment based on disability, or perceived or actual physical or mental impairments.  Potential liability for disability-related harassment claims has increased because offensive statements that relate in any way to a mental or physical impairment may give rise to liability, regardless of whether the alleged victim actually suffered from an impairment or was otherwise disabled.  For example, an employee who calls a co-worker “psycho” or “retarded” could potentially create an actionable hostile work environment under the ADA even if the co-worker has no mental health history and has an above-average IQ.
  • Properly and contemporaneously document employment decisions involving an employee who is an individual with a disability or has a record of a disability.
  • Analyze pre- and post-employment testing and screening (including language contained in employment applications) to ensure they are job-related and consistent with business necessity.
  • Train supervisors and managers as to the broad coverage of the ADAAA and their responsibilities under the new Act.  At a minimum, the focus of training should include: 1) how they identify requests for workplace modifications; and 2) who they partner with in Human Resources as to the “interactive process” regarding modifications.

© 2011, Franczek Radelet P.C. 


Out of Work? Out of Luck

Great posted added today at the National Law Review about the EEOC’s hearing about the impact of employers considering only those currently employed for job vacancies.  

EEOC Examines Employers’ Treatment of Unemployed Job Applicants at Hearing

WASHINGTON—In a public meeting held today, the U.S. Equal Employment Opportunity Commission (EEOC) examined the impact of employers considering only those currently employed for job vacancies.

“Throughout its 45 year history, the EEOC has identified and remedied discrimination in hiring and remains committed to ensuring job applicants are treated fairly,” said EEOC Chair Jacqueline A. Berrien. “Today’s meeting gave the Commission an important opportunity to learn about the emerging practice of excluding unemployed persons from applicant pools.”

According to Helen Norton, Associate Professor at the University of Colorado School of Law, employers and staffing agencies have publicly advertised jobs in fields ranging from electronic engineers to restaurant and grocery managers to mortgage underwriters with the explicit restriction that only currently employed candidates will be considered. “Some employers may use current employment as a signal of quality job performance,” Norton testified. “But such a correlation is decidedly weak. A blanket reliance on current employment serves as a poor proxy for successful job performance.”

“The use of an individual’s current or recent unemployment status as a hiring selection device is a troubling development in the labor market,” said Fatima Goss Graves, Vice President for Education and Employment of the National Women’s Law Center. She noted that this practice “may well act as a negative counterweight” to government efforts to get people back to work. Women, particularly older women and those in non-traditional occupations, are disproportionately affected by this restriction, testified Goss Graves.

Denying jobs to the already-unemployed can also have a disproportionate effect on certain racial and ethnic minority community members, Algernon Austin, Director of the Program on Race, Ethnicity, and the Economy of the Economic Policy Institute, explained. Unemployment rates for African-Americans, Hispanics and Native Americans are higher than those of whites. When comparing college-educated workers, the unemployment rate for Asians is also higher. Thus, restricting applications to the currently employed could place a heavier burden on people of color, he concluded.

The use of employment status to screen job applicants could also seriously impact people with disabilities, according to Joyce Bender, an expert in the employment of people with disabilities. “Given my experience, I can say without a doubt that the practice of excluding persons who are currently unemployed from applicant pools is real and can have a negative impact on persons with disabilities,” Bender told the Commission.

Dr. William Spriggs, Assistant Secretary of Labor for Policy, offered data supporting this testimony. Spriggs presented current national employment statistics showing that African-Americans and Hispanics are overrepresented among the unemployed. He also stated that excluding the unemployed would be more likely to limit opportunities for older applicants as well as persons with disabilities.

“At a moment when we all should be doing whatever we can to open up job opportunities to the unemployed, it is profoundly disturbing that the trend of deliberately excluding the jobless from work opportunities is on the rise,” said Christine Owens, Executive Director of the National Employment Law Project. In addition to presenting statistical evidence, she recounted stories unemployed workers have shared with her organization where they were told directly that they would not be considered for employment due to being unemployed.

James Urban, a partner at the Jones Day law firm, who counsels employers, expressed doubt as to the extent of the problem. Fernan Cepero, representing the Society of Human Resource Professionals, told the Commission that his organization is not aware of this practice being in regular use. But both Mr. Urban and Mr. Cepero noted that the automatic exclusion of unemployed persons from consideration does not constitute “due diligence” in the screening of job applicants.

© Copyright 2011 – U.S. Equal Employment Opportunity Commission

How the Supreme Court Skirted ADEA Issues During Reductions in Force and What Must be Done to Fix It

Congratulations to the Fall 2010 National Law Review Student Legal Writing Contest Winners Charles “Chip” William Hinnant III and John Erwin Barton of  the  Charlotte School of Law. 

Jack Gross was born in 1948, and grew up in Mt. Ayr, Iowa.[i] His father was an Iowa Highway Patrolman and his mother was a 3rd grade teacher.[ii] Throughout his childhood and into his adult life, health issues defined Mr. Gross.[iii] He developed chronic ulcerated colitis, and as a result underwent multiple operations involving the removal of his colon, and a part of his large intestine.[iv]When he graduated from Drake University with a B.S. in Personnel Management, he weighed 87 pounds.[v]

Upon graduating Mr. Gross went to work for Farm Bureau as a claims adjuster, eventually becoming the highest volume adjuster in the company.[vi]He stood out for his outstanding contributions, earned many professional designations, and began teaching classes to other employees.[vii]Mr. Gross’ exceptional work performance and contributions to his company were reflected in his annual reviews, which were in the top 3-5% of his company for 13 consecutive years.[viii]Yet, notwithstanding Mr. Gross’ improbable story, in 2003, all claims department employees over the age of 50 with a title of supervisor and above were demoted on the same day.[ix]Mr. Gross was replaced by a person he had hired who was in her early forties, did not have the required skills for the position as stated on the company job description, nor his breadth of experience.[x]Mr. Gross would later file an age discrimination lawsuit pursuant to the Age Discrimination in Employment Act (ADEA)[xi]in federal court, and the rest as they say, is history.

On June 18, 2009, the Supreme Court of the United States decided Gross v. FBL Financial Services, Inc.,[xii] which simultaneously held that mixed-motive theories are never proper in ADEA cases and that a plaintiff bringing a disparate-treatment claim pursuant to the ADEA must prove that age was the “but-for” cause of the challenged adverse employment action.[xiii] In effect, the Gross holding abrogated the mixed-motive theory presumably applicable to ADEA cases established inPrice Waterhouse v. Hopkins,[xiv]and led to a celebrated victory for employers to the detriment of older, ADEA protected employees just like Jack Gross, the prototypical individual that the ADEA was created to protect.

While Gross has considerably heightened the burden placed upon ADEA plaintiffs, particularly given the near universal absence of direct evidence of age discrimination in ADEA cases,[xv] its holding imposes a logically impossible burden upon ADEA plaintiffs in Reduction in Force (RIF) cases that the Supreme Court seems to have not contemplated given that Gross did not involve a RIF.[xvi] In short, during a RIF, an ADEA plaintiff always loses.  In order to correct this logical inconsistency, either the Supreme Court must grant certiorari to an ADEA RIF case to affirmatively correct its mistake, or Congress must pass legislation limiting the holding of Gross to non-RIF scenarios, if not all ADEA cases.

How Gross Prevents an ADEA RIF Plaintiff from Ever Prevailing at Trial

Gross prevents an ADEA RIF plaintiff from ever prevailing at trial because an employer will always be able to claim that a legitimate, non-discriminatory reason for the adverse action taken against the employee exists. Inherent in any RIF are financial troubles that force an employer to terminate some of its employees in an effort to remain in business; as a result, the courts have recognized that a RIF is a legitimate business justification for an adverse employment action.[xvii]

Consequently, prior to Gross, when an employer utilized a RIF as a legitimate business justification for an adverse employment action, the plaintiff was required to make an “additional showing” that age was a motivating factor in their termination in order to prevail using a mixed-motive theory of discrimination.[xviii]

However, because Gross simultaneously eliminated the mixed-motive theory as a viable option for ADEA plaintiffs and heightened the requisite showing necessary for a plaintiff to prevail from age as a “motivating-factor” of the adverse employment action to age as the “but-for” cause of the adverse employment action, such an “additional showing” can neverbe made under the law as it is currently interpreted.

Because an employer will always be able to claim that a RIF constitutes a legitimate business reason for termination, under Gross, a plaintiff cannot ever offer evidence that “illegal … motives … were the ‘true’ motives”[xix]for the adverse employment action taken against them.

As a result, an ADEA RIF plaintiff can never prove that “but-for” their age, the employer would not have initiated the adverse action against them given the ever-present excuse of a RIF. Thus, while Gross is detrimental to all ADEA plaintiffs, it is particularly prejudicial to ADEA plaintiffs whose adverse action is a result of a RIF, as it creates a logical impossibility for these plaintiffs to everhave a chance of prevailing against their employer.

What the Supreme Court Can Do to Fix the Gross Problem

The Supreme Court can and needs to fix the Gross problem and the confusion it has created for lower courts by granting certiorari to an ADEA RIF case and explicitly stating that mixed-motive theories are and must be applicable to ADEA RIF cases, and that evidence of age discrimination can be considered a “motivating factor,” rather than the “but for” cause, of illegal age discrimination within the burden shifting framework articulated within McDonnell Douglas Corp. v. Green.[xx]

As of this moment, the lower district and circuit courts are confused as to the application of Gross and its relationship with the McDonnell Douglas prima facie case and burden-shifting framework. Furthermore, this confusion is certain to increase as more RIF and non-RIF ADEA cases are filed in the near future as a result of the current economic recession, and as the unworkable nature of theGross holding in ADEA RIF cases is further exposed. Notably, post-Gross ADEA cases are relatively few and far between at the time this article is being written; however, early signs support the contention that the lower courts are not in conformity with how to interpret Gross.

The Tenth Circuit explicitly states that Gross has created some uncertainty regarding burden shifting in the ADEA context.[xxi] The Jones decision discusses in detail the application of Gross to McDonnell Douglas and clearly states that the court will not overturn their prior decisions applying the burden-shifting framework to ADEA claims.[xxii]

Furthermore, the Sixth Circuit attempts to reconcile Gross’ “but for” language with the burden shifting test in McDonnell Douglas.  By applying similar language from the application of Title VII in McDonnell Douglas, that “where there is a reduction in force, a plaintiff must … show that age was a factor [emphasis added] in eliminating his position”[xxiii]the court attempts to pigeonhole the two decisions together.  The use of the language “a factor” instead of “the factor” in the Johnsondecision enunciates the line that the court has drawn between “but for” causation of age discrimination and age being a “motivating factor” in determining whether illegal age discrimination is afoot.

The Ninth Circuit on the other hand, has essentially followed Gross to the letter.[xxiv] In the McFadden decision, the Ninth Circuit holds alongside the Supreme Court and agrees that the McDonnell Douglas burden-shifting framework does not apply to ADEA claims, and that a plaintiff must carry the burden of persuasion throughout the case.  Therefore, no burden shifting occurs, and causation must be “but-for.”

These cases, et al., are the first evidence of post-Gross confusion, and illustrate the growing problem facing the lower courts as well as plaintiffs soon to bring mixed-motive age discrimination cases involving RIFs. Some circuits and district courts continue to apply theMcDonnell Douglas burden-shifting framework and will consider whether age was a “motivating factor” of an adverse employment action, while others require a heightened burden of proof that age was the “but for” cause of an adverse employment action. Such varying interpretations of Gross will inevitably lead to circuit splits, the absence of uniformity in the application of federal law, and a future Supreme Court decision to clean up the mess.

Thus, the Supreme Court should grant certiorari to an ADEA RIF case and seek to dispel the impossible burden it has placed upon RIF plaintiffs.

What Congress Can Do to Fix the Gross Problem

Congress can fix the Gross problem by enacting legislation that limits the scope of the Gross decision to non-RIF ADEA cases, or, in the alternative, to all ADEA cases by explicitly stating that the mixed-motive theory articulated in Price Waterhouse v. Hopkins,[xxv] as well as the burden shifting framework articulated in McDonnell Douglas Corp. v. Green,[xxvi] are fully applicable to ADEA cases.

As this article is being written, both houses of Congress have responded to theGross problem by proposing bills entitled the “Protecting Older Workers Against Discrimination Act,”[xxvii] the stated purpose of which are “to amend the Age Discrimination in Employment Act of 1967 to clarify the appropriate standard of proof.”[xxviii] While these bills clearly reflect Congressional understanding of the harm that Gross causes ADEA plaintiffs, their current language as well as their present place in the legislative process creates foreseeable problems that should be swiftly resolved.

First and foremost, both bills are presently tied up in Committees.[xxix]As a result, amidst a nationwide economic recession resulting in numerous corporate RIFs as discussed infra, plaintiffs filing age discrimination lawsuits while in post-Gross, pre-Congressional action “purgatory” will be left without a remedy.

Second, because such “purgatory plaintiffs” will likely exist given the current economic recession, Congress should seek to include retroactive language in the proposed bills in an effort to afford these plaintiffs a remedy. Currently, no such retroactive language exists in either bill proposal.[xxx]

Third, the proposed bills as presently written include no language recognizing theGross problem’s disproportionate and logically impossible burden it places on ADEA RIF plaintiffs, as opposed to the more classic, non-RIF ADEA plaintiff.[xxxi]While it may be reasonably presumed that general language that disavows the Gross decision’s applicability to ADEA cases would prevent its application to ADEA RIF plaintiffs as well, there is no sense in leaving any provisions of these bills subject to judicial interpretation.

The role of Congress cannot be understated in fixing the Gross problem, and while it has taken the proper initial steps to remedy the subversion of federal law thatGross represents, timeliness, retroactivity, and precision in language choice to guarantee the protection of ADEA RIF plaintiffs soon to be effected is essential in ensuring that the rule of law is upheld.  As Justice Ginsburg famously stated in another recent travesty of judicial interpretation in the employment context,[xxxii]“the ball is in Congress’ court.”[xxxiii]

Why Fixing the Gross Problem Matters Now More than Ever

A survey of ADEA charges filed with the EEOC from 1997 to 2009 indicates that in 2008 and 2009, more ADEA charges were filed with the EEOC than in any other fiscal year in the 12-year sample size.[xxxiv]Furthermore, a tremendous increase in ADEA charges is glaringly apparent from 2007 to 2008.[xxxv]While no known data exists to support the contention, it can be reasonably inferred that such a substantial rise in ADEA charges filed with the EEOC is a byproduct of the ongoing economic recession in the United States.

As this article is being written and during the time period reflected in the EEOC charge data, numerous corporate employers, all of which are subject to the protections of the ADEA, are reducing their workforces in droves in an effort to reduce operating costs and maintain profit margins. To name a few that can be quickly found with a simple Google search, the health insurer Humana,[xxxvi] the discount retailer Target,[xxxvii] the drug manufacturers Sanofi-Aventis,[xxxviii]Eli Lilly,[xxxix]and Bristol-Meyers Squib,[xl] the oil giant Shell,[xli] the healthcare giant Cardinal Health,[xlii]and the telecommunications provider AT&T,[xliii]are all reducing their workforces during the current economic recession.

With every RIF that takes place between now and the moment that either the Supreme Court or Congress act to eliminate the applicability of the Gross decision to ADEA RIF cases if not ADEA cases as a whole, multitudes of ADEA protected plaintiffs adversely effected by a RIF that may or may not have a compelling case for illegal age-motivated discrimination against their employer, will ultimately be denied the legal protections afforded to them under federal law.[xliv]

Above all else, the Supreme Court, Congress, and the readers of this article must remember that people like Jack Gross are exactly those that the ADEA was meant to protect.  Now, the Supreme Court has to fix its mistake, or Congress must do it for them.

 

[i]Testimony of Jack Gross:  Hearings Before the Senate Judiciary Comm., 111thCong. (2010).

[ii]Id.

[iii]Id.

[iv]Id.

[v]Id.

[vi]Id.

[vii]Id.

[viii]Id.

[ix]Id.

[x]Id.

[xi]29 U.S.C.A 621 (1967)

[xii]129 S. Ct. 2343 (2009).

[xiii]Id.

[xiv]109 S. Ct. 1775 (1989).

[xv]See Generally, Desert Palace, Inc. v. Costa, 123 S.Ct. 2148 (2003).

[xvi]See 129 S.Ct. 2343 (2009).

[xvii]See Hardin v. Hussmann Corp., 45 F.3d 262 (8th Cir. 1995); Coleman v. Quaker Oats Co., 232 F.3d 1271 (9th Cir. 2000).

[xviii]See Hardin v. Hussmann Corp., 45 F.3d 262 (8th Cir. 1995).

[xix]NLRB v. Transp. Mgmt. Corp., 103 S. Ct. 2469, 2473 (1983).

[xx]93 S. Ct. 1817 (1973).

[xxi]Jones v. Okla. City Pub. Schs., 617 F.3d 1273, 1278 (10th Cir. 2010).

[xxii]Id.

[xxiii]Johnson v. Franklin Farmers Cooperative, 378 F. Appx. 505, 509 (6th Cir. 2010).

[xxiv]McFadden v. Krause, 357 F. Appx. 17 (9th Cir. 2009).

[xxv]109 S. Ct. 1775 (1989).

[xxvi]93 S. Ct. 1817 (1973).

[xxvii]H.R. 3721, 111th Cong. (2009), 2009 FD H.B. 3721 (NS) (Westlaw), See also S. 1756, 111th Cong. (2009), 2009 FD S.B. 1756(NS) (Westlaw).

[xxviii]Id.

[xxix]Id. (H.R. 3721 presently rests in the Subcommittee on Health, Labor, Employment, and Pensions, while S. 1756 presently rests in the Committee on Health, Education, Labor, and Pensions.)

[xxx]See http://www.govtrack.us/congress/billtext.xpd?bill=h111-3721 andhttp://www.govtrack.us/congress/billtext.xpd?bill=s111-1756

[xxxi]See Id.

[xxxii]Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, 127 S. Ct. 2162 (2007)

[xxxiii]Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, 661, 127 S. Ct. 2162, 2188 (2007) (Ginsburg, J., Dissenting).

[xxxiv]http://www.eeoc.gov/eeoc/statistics/enforcement/adea.cfm (24,582 charges were filed in 2008 and 22,778 charges were filed in 2009.)

[xxxv]Id. (Only 19,103 charges were filed in 2007.)

[xxxvi]Catherine Larkin and Alex Nussbaum, Humana Plans to Reduce Workforce by 1,400 This Year, Bloomberg Businessweek, Feb. 17, 2010,http://www.businessweek.com/news/2010-02-17/humana-plans-to-reduce-workf…

[xxxvii]Scott Mayerowitz and Alice Gomstyn, Target Among the Latest Chain of Grim Layoffs: Major Companies From Communications to Retail Layoff 40,000; More Americans Lose Jobs, ABC News, Jan. 27, 2009,http://abcnews.go.com/Business/CEOProfiles/story?id=6731375&page=1

[xxxviii]Linda A. Johnson, Sanofi-Aventis to Reduce US Workforce by 1,700, The Boston Globe, Oct. 8, 2010,http://www.boston.com/news/health/articles/2010/10/08/sanofi_aventis_to_…

[xxxix]Eli Lilly to Reduce Workforce, United Press International, Sept. 14, 2009,http://www.upi.com/Business_News/2009/09/14/Eli-Lilly-to-reduce-workforc…

[xl]Ellen Gibson, Bristol-Myers to Cut 3% of Workforce to Reduce Costs, Bloomberg Businessweek, Sept. 23, 2010,

http://www.businessweek.com/news/2010-09-23/bristol-myers-to-cut-3-of-workforce-to-reduce-costs.html

[xli]Shell To Layoff Workforce To Reduce Cost, Energy Business Review, April 30, 2009, http://utilitiesnetwork.energy-business-review.com/news/shell_to_layoff_…

[xlii]Press release, Cardinal Health, Cardinal Health to Reduce Workforce to Respond to Economic Conditions, (March 31, 2009.)

http://cardinalhealth.mediaroom.com/index.php?s=43&item=295 (

[xliii]AT&T to reduce workforce by 12,000, San Antonio Business Journal, Dec. 4, 2008,

http://www.bizjournals.com/sanantonio/stories/2008/12/01/daily29.html

[xliv]See the Age Discrimination in Employment Act at 29 U.S.C.A 621 (1967)

Charles “Chip” William Hinnant III and John Erwin Barton © Copyright 2010

Picking the Perfect Jury:What Should Be Done About the Problem of Race-Based Exemptions ABA Teleconference & Live Audio Webcast – October 21st

The National Law Review would like to make you aware of an upcoming ABA Teleconference and Live Webcast which has been approved for Elimination of Bias Credits in applicable jurisdications as well as CLE credit — Picking the Perfect Jury:What Should Be Done About the Problem of Race-Based Exemptions: 

Program Description

As recently reported in the New York Times, “Today, the practice of excluding blacks and other minorities from Southern juries remains widespread” and, according to the Equal Justice Initiative and defense lawyers, is “largely unchecked.” There is a continuing indifference to prosecutors’ race-based exclusions of prospective jurors.  Prosecutors have learned how to claim that their exclusions are race-neutral, even where they do not exclude white jurors whose answers during jury selection are indistinguishable from those of jurors of color whom the same prosecutors do exclude.

At this program, the renowned Executive Director of the Equal Justice Initiative, Bryan Stevenson, will discuss his organization’s June 2010 report on this subject (a report which was the basis for the Times story and other media reports) and will join with other expert panelists and discussing the report’s implications and what those who attend this program can do to rectify this situation.  There will be special focus on Tennessee, Alabama, Arkansas, and Mississippi.

CLE Credit

1.0 hours of CLE credit in 60-minute states/1.2 hours of CLE credit in 50-minute states have been requested in states accrediting ABA teleconferences and live audio webcasts.*

NY-licensed attorneys: This non-transitional CLE program has been approved for experienced NY-licensed attorneys in accordance with the requirements of the New York State CLE Board for 1.0 total NY CLE credits.

Elimination of bias credit has been requested in states with elimination of bias requirements.

The following states accept ABA teleconferences for CLE credit:
AL, AK, AR, AZ, CA, CO, FL, GA, IA, ID, IL, KY, LA, ME, MN, MO, MS, MT, NC, ND, NH, NM, NV, NY, OK, OR, RI, SC, TN, TX, UT, VA, VI, VT, WA, WI, WV, WY.

*States currently not accrediting ABA teleconferences: DE, IN, PA, KS, OH

Teleconference / Live Audio Cast Hours: 

4:30 PM-5:30 PM Eastern

3:30 PM-4:30 PM Central

2:30 PM-3:30 PM Mountain

1:30 PM-2:30 PM Pacific

To Register or for More Information: 

Register by Phone:  800.285.2221 / Monday – Friday 
8:30 AM – 6:00 PM Eastern Event Code: cet0rbe   http://bit.ly/dkP9EQ